PHOTO: BLOOMBERG
Ng Kok Song meditates for 25 minutes every morning to clear his mind. He might tend to his plants or even take a nap afterwards. But, far from retiring quietly, the 74-year-old has developed one of Singapore’s fastest-growing investment firms, with ambitions to expand globally.
Since Ng co-founded Avanda Investment Management in mid-2015, the firm’s assets have more than doubled to about US$10 billion, shortly after he left as GIC’s chief investment officer after a 42-year career in the public sector.
With Singapore’s status as a global finance hub and gateway to Asia growing – and Hong Kong’s allure fading – Avanda is looking to expand by investing in a broader range of assets across the region, including China, and adding new clients ranging from family offices to pension funds and other institutions.
Avanda has benefited greatly from the support of state-owned businesses. The Singapore Labour Foundation, Temasek Holdings, and GIC, according to Ng, were his three first clients, and their donations enabled the business debut with about US$4 billion in assets. Since then, market returns have accounted for roughly half of the gains, with the remainder coming from new clients and more funding as the firm built a track record.
Avanda today has five funds and around 20 clients around the world, ranging from university endowments and government agencies to affluent Asian and American individuals.
Long Run
From its establishment until December 2021, the firm has generated a 7.5% annualised rate of return before fees. This is greater than the Eurekahedge Multi-Strategy Hedge Fund Index’s average return of 5.9% from 2016 to 2021. According to With Intelligence data, Avanda is also larger than any Singapore-based hedge fund; the largest one manages US$7.7 billion.
Because Avanda is a long-only investor, Ng sees it as an asset manager rather than a hedge fund. Management costs are typically around 0.5 percent, plus a performance fee if returns exceed pre-determined targets.
The Avanda Global Multi-Asset Fund is the company’s initial fund, and it invests in a variety of global public equities, bonds, and currencies, with other funds focusing on Asian stocks, global fixed income, and even private deals.
Pre-IPO fundraising rounds, such as Indonesia’s GoTo Group in November, were among the previous deals. It has also acted as a cornerstone investor, such as in the case of Monde Nissin, a Philippine food manufacturer. It now wants to back private companies that have no immediate plans to go public, either directly or through other funds.
“Moving forward, it will be vital to investigate alternative investments like as private equity, real estate, real resources, the greening economy, and other areas of technology,” Ng added, highlighting the challenge of achieving returns that beat inflation from traditional investments.
China Bull
Ng, who also serves on the worldwide advisory board of Pacific Investment Management Co., has long advocated for increased investment in Asia, particularly China. He previously recommended investors to allocate half of their portfolio to China or Asia, and stated Avanda put its money where its mouth is in 2021.
“We switched over 20% of our global fixed income exposure to Chinese government bonds,” he said. “That was unexpected, but our experience over the last 12 months has backed up our prediction that China’s bond yields will fall.”
A third of its global stocks exposure was also allocated to Asia, with China receiving the lion’s share, followed by regional markets such as South Korea and Vietnam. Avanda is also hedging against greater inflation by purchasing commodities such as gold and inflation-linked bonds.
However, Ng believes that the global economy will “get along OK” because both China and the United States have shown resilience during the pandemic. He went on to say that the Chinese property market may have reached its bottom.
Agriculture, health services, green economy enterprises, and companies in the supply chains for products like vehicles are four of Ng’s favorite areas of interest in China.
“But you have to be careful because China will not allow profiteering in important sectors of services – we’ve seen this in education and now in the property sector,” he added, adding that the period of hyper growth in such disciplines was ended.
Ng meditates once more as the day draws to a close. But that doesn’t mean he’ll take a break from what could be the most prosperous years of his life, far far from a crowded childhood spent sleeping under an attap palm-thatched roof.
He remarked of investors, “I like to suggest that we’re all guessing.” “However, some of us are guessing based on experience and knowledge of what’s going on, while others are speculating blindly.” BLOOMBERG